If you are a subscription-based business owner, you would know how difficult it is to hit the perfect pricing point to impress your customers. However, a perfect pricing strategy is what makes your business profitable.
Is it just the price that decides the business success? No, communication plays a major role in transforming a visitor into your customer. Hence, it is essential to convey that why a consumer will feel good when they choose your product and how their requirements are met. But, how do you determine a perfect pricing strategy?
Arguably there is no one strategy that can apply to all the customers. But you can decide on a pricing strategy by understanding the sector of business that you are targeting and the customer behaviour in that market. Work out a pricing model that benefits you, and here are some of the strategies that you can consider.
1. Don’t be afraid to ask
When trying to figure out the best price for your subscription-based business, never shy away to ask your customers. Getting to know your customers’ viewpoints on the pricing model is the best way to showcase that you are working continuously to improve your business. It also demonstrates that you value your consumers’ feedback.
Use Customer Survey Software to study your customers that helps you:
- Track your customers’ journey.
- Strengthen customer relationships.
- Establish a strong first impression.
- Download a detailed report of your research.
- Determine the deciding factors of your customers’ behaviour and the sales.
2. Be truthful
When it comes to pricing, always be truthful to your customers. A good pricing strategy would be to avoid the hidden charges or keeping the cost in a place on your website where it is hard to find. Design your website in such a way that your potential customers should feel that your business is well established and successful. Check out the authoritative businesses in your domain on how they put up the price on their website and decide your pricing strategy.
3. Basic free or freemium
The freemium strategy or the basic free model is a great way to give an opportunity to people to experience your product and its features. It lets your potential customers test all the features of your product for a limited period and upgrade to a paid package later on.
Some might disagree with the freemium strategy as they feel it’s a customer acquisition tactic than a pricing strategy, but nonetheless, it should be considered as you anticipate your customers will like the product.
Remember, your freemium strategy can become expensive if you don’t set a time limit on a free subscription. So, allow your customers to experience the features and offers to start out free, but let them upgrade as per their requirements.
The best example for a freemium model is Netflix. It starts with a free trial and then the customer has to upgrade after thirty days.
4. Upgrade incentives and promotions
Who ignores if you offer an incentive? If a small reward can increase the long-term association of your customers for your product or service, it’s worth offering an incentive. This way, the customers who are paying for a tier of service would upgrade to the next level of service with a small push of encouragement.
Incentives and promotions are very common tactics among subscription-based businesses and, it works like a charm. So, work on your strategies to entice your customers to upgrade their plan to the next tier.
For example, a company called “Kiwi Co” sells a box full of learning tools and projects to the children of all ages and encourage their creativity and innovation. They offer huge discounts if they pay the amount for the following months.
5. Pay-as-you-go pricing model
Pay-as-you-go pricing is a very familiar system. Since you can compare the model to how you pay for your utilities, you will have to pay for the services you use. When you stop using the services, there are no additional costs or fees, till then you will be charged automatically at the end of each month, with no hassles.
Amazon Web Services uses pay-as-you-go pricing model for their cloud services. An online payments company called MoonClerk uses pay-based-on-volume model with a minimum monthly charge.
6. Pay annually
Depending on what works better for your business, offer your customers to pay annually. If the customer is open to making a large investment, it means they are committed and value their time. So, it’s wise to offer a percentage discount or 1-2 months free usage for subscribing to an annual plan.
The online writing assistant portal, Grammarly has monthly, quarterly, and annual plans. The annual plan is very popular as it comes with a huge percentage discount.
The perfect pricing strategy is a way to succeed in your subscription-based business. However, it is wrong to expect that one strategy will work forever and make your business successful or it will not remain the same. Mix and match the strategies that worked for you and change them according to your business needs.